Experts think that the economy is in a crossroad and 2014 will be a strong test that will define its future.
For Arben Malaj, this is the last year when the Albanian government has the luxury to stimulate the economy through debts.
“In principle, by those reforms that will be done, and by how the mid-term budget 2015-2017 will be built, we will see that it will have less spending than ever, which means that there will not be the same flexibility. We must prepare for reforms that will help us compensate the deficit lowering cuts with increased investments from the domestic and foreign private businesses. Otherwise, it will be difficult to be optimistic”, Malaj declared.
The government will spend 455 billion ALL in total, 35 billion of which will be used for paying delayed payments.
Selami Xhepi, and economy expert, thinks that a strong stimulus might encourage an economic growth, but he underlines that right because of this there are other and bigger risks for the economy.
“Taking more loans is positive on one side, due to the increased aggregate request, but on the other hand it will have a significant growth of the public debt burden, and its effects on the financial markets might threaten further developments. There are also uncertainties even for the interest rate in the European markets”, Xhepa declared.
The consensus among economists is that the high debt alone cannot be the salvation boat for the economy, if the government will not start reforms for making business easier.
“The government must give advantage to the ease of access to business, and the rule of law should be a priority. Business should feel that it can compete, that there will be fewer or completely eliminated obstacles that have brought the economic growth to 1%”, Malaj declared.
Selami Xhepa says that besides the business climate and the fiscal administration, the reforms must also affect the public entities that survey the markets.
“Structural reforms could counterbalance these negative effects, especially those for improving the system of administering policies in general, starting from the regulation entities and continuing with the market survey entities. Normally, what is happening is a bigger growth of these changes in the fiscal package, which is being billed to the consumer, and this shows the weaknesses in the functionality of the market surveillance authorities, and they also show how markets should function normally”, Xhepa declared.
2013 is considered by internationals as the lowest point of the Albanian economy. The economic growth for 2014 will have a light improvement, but risks are higher due to the increased debt.
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